HOUSTON, Aug. 24 /PRNewswire-FirstCall/ -- Natural Resource Partners L.P.
(NYSE: NRP and NYSE: NSP) today announced that it has entered into a
memorandum of understanding with Sedgman USA, LLC under which the companies
would jointly identify coal preparation, coal handling and rail load-out
facility opportunities in the United States. Under the agreement, Sedgman
will design and build the facilities and NRP will acquire the facilities from
Sedgman and lease them back. Sedgman will operate the facilities under
contract with mining companies, and NRP will receive a throughput fee for each
ton of coal handled by the facilities based upon a percentage of the gross
selling price with a designated minimum per ton. In addition to the minimum
per ton, NRP will receive monthly recoupable minimums on the plants analogous
to its royalty arrangement for coal reserves.
Pursuant to the memorandum of understanding, NRP has entered into a design
and build agreement with Sedgman on the first coal preparation, coal handling
and rail load-out facility. The Coal Mountain preparation plant, handling
facility and rail load-out facility is located near Baileysville, WV. The
preparation plant is still under construction, but the coal handling and rail
load-out facility has been completed and is currently processing coal. NRP
expects that approximately 35 million tons of coal will be processed through
this facility during its life. The total construction price for the facility
will be approximately $16.1 million, of which approximately $13.8 million was
paid upon the execution of the agreement. The initial payment was funded
through the partnership's credit facility. The remaining payments on the
facility are scheduled to be paid between now and the completion of
construction.
The coal being processed through these facilities is mined by Bluestone
Coal, a subsidiary of James C. Justice Industries, Inc. NRP anticipates
approximately $3.0 million in annual revenues starting in 2007 when the plant
will operate for the full year. NRP expects the transaction to be immediately
accretive.
"We are extremely excited to enter into these agreements with one of the
largest coal preparation plant/material handling companies in the world as
they expand their business to provide preparation plant operations to the
mining industry in the United States. We believe the memorandum of
understanding will lead to a number of opportunities, each of which will
provide more diversity, and therefore more stability, to our cash flow," said
Nick Carter, President and Chief Operating Officer. "This first plant is
indicative of the benefits that can come to the mining community when the
miner, Sedgman and NRP each contribute their expertise and resources to
provide for a needed facility."
Sedgman USA, headquartered in Pittsburgh, PA, is one of the largest
international engineering and construction companies specializing in coal
preparation and material handling. Sedgman supplies total engineering,
construction, project management and contract operations services to the coal,
minerals and electric industries worldwide. In addition to Pittsburgh,
Sedgman also has offices in China and Russia.
Natural Resource Partners L.P. is headquartered in Houston, TX, with its
operations headquarters in Huntington, WV. NRP is a master limited
partnership that is principally engaged in the business of owning and managing
coal properties in the three major coal producing regions of the United
States: Appalachia, the Illinois Basin and the Powder River Basin. The common
units are traded on the New York Stock Exchange (NYSE) under the symbol NRP
and the subordinated units are traded on the NYSE under the symbol NSP.
For additional information, please contact Kathy Hager at 713-751-7555 or
khager@nrplp.com . Further information about NRP is available on the
partnership's website at http://www.nrplp.com .
This press release may include "forward-looking statements" as defined by
the Securities and Exchange Commission. Such statements include the estimated
revenues, the completion date of the coal handling facilities, the coal
reserves associated with the facilities, as well as the accretive nature of
the transaction. All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that the partnership expects, believes or anticipates will or may occur in the
future are forward-looking statements. These statements are based on certain
assumptions made by the partnership based on its experience and perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the partnership. These risks include, but are not
limited to, decreases in demand for coal; changes in operating conditions and
costs; production cuts by our lessees; commodity prices; unanticipated
geologic problems; changes in the legislative or regulatory environment and
other factors detailed in Natural Resource Partners' Securities and Exchange
Commission filings. Natural Resource Partners L.P. has no obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
SOURCE Natural Resource Partners L.P.
CONTACT:
Kathy Hager of Natural Resource Partners L.P., +1-713-751-7555
or
khager@nrplp.com
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